The great umbrella company scam

getmore4less

GB350 wrote: »

So at this point in time I'm now expected to pay 4....yes 4 lots of NI.... classes 1, 2 & 4, and also my employers NI.

Umbrella all you pay is employee /employer NI


The point is you become PAYE of the umbrella but your revenue generation pays the employee/er NI and a margin for them to do the admin and pay the liability insurances.


Not sure why you think in this case normal expense claims through the umbrella as your employer are not allowable by HMRC


As for expenses, umbrella should mean you can get them weekly/monthly and a decent one will let you bulk them up if beneficial for NI.

getmore4less

AbbieCadabra wrote: »

What costs are you referring to regards setting up as Ltd? We pay around £600 per yr for an online accountancy service, i doubt you'd have to pay more than this. Are there other costs involved in your case? I don't know what PSC is.

For your t/o you probably wouldn't be recommended to set up as Ltd, but these aren't normal circumstances.

If you can do it for £600 then umbrella could well be more do any do it for less than £15pw?


IME they are just as anal about the record so no saving of effort on that side.

GB350

The payroll umbrella company have kindly calculated the figures for me today.
My current current CIS net take home pay is £470.00. This is based on a 45 hr week at £13.50 per hr.
Under the proposed umbrella scheme, my 45 hr week at £13.50 per hr would lead to a net take home of £401.00 plus an additional " holiday " entitlement payment of around £45.00 which is payable a week in hand. Effectively then £446.00 a week. This is after all the relevant expenses have been claimed.
As I mentioned in previous post my end of year tax rebate would now be non existent so I will find myself about £70.00 a week worse off in real terms.
This amounts to a pay cut of approximately 14%.
I would bet everything I own that the agencies and payroll companies are not taking a 14% hit on their margins so why the hell should I be expected to.
Anybody else taken a 14% pay cut recently?....

GB350

Just to briefly address the NI issue again. The agency work is my bread and butter so to speak, but I also do occasional private work at weekends. This income is obviously classified as self employment . Therefore I would continue to need to pay a class 2 stamp and class 4 on any relevant profits made...

getmore4less

45hr 46.4 weeks(5.6 holidays) £13.50 is £28188 gross


http://www.listentotaxman.com/index.php


PAYE £425pw and if paying employer NI £375(ish)




What's not clear is what your real net would be because some expenses are normal doing job expenses some are expenses doing the job some are convenient gross because the system allows.


Remember expenses have to be money that you pay out so you never get them in your real pay.


At £28k+ Ltd is probably worth a look and that way you can start to bypass the agency and subcontract work id you get too much.

GB350

Thanks for that link to the tax calculator.
Fascinating to put my figures in and find that my weekly take home under CIS is pretty much identical to what it would be if I were employed PAYE. Only difference being that instead of a rebate of between £2000 & £2,500 every year I would be entitled to statuary holiday pay of 21 days, I think that's what it is, and also sickness benefits, pension contributions and the opportunity to claim unemployment benefit if I did find myself out of work.
The employers NI contributions would also amount to about two thirds of what they are actually paying to the agency in fees to procure my services.
If the big construction companies could just grasp the nettle and start offering the jobs directly, even if they are on a short term contract basis then we could rid ourselves of the agencies and payroll companies and find ourselves in the position that the government obviously wants.

GB350

The representative from my agency is due on site tomorrow to address the issue of our enforced switchover to an umbrella company payroll.
The fact that the 13.8% pay cut he is expecting us to take is precisely the amount of employers NI he should be paying through his companies books will be the first thing on the agenda.
My position is that either they take this hit and pay it themselves, or they renegotiate their rates with the client so that it is incorporated into the amount charged for my services.
My hourly rate will need to rise by at least £1.50 to cover this.
Got to say that I'm disappointed with the lack of tradesmen with an opinion to voice on this thread. Maybe I'm venting my anger on the wrong forum.
Or is it just me being screwed over...????

AbbieCadabra

it's not just you, i remember this previous thread here as i was unaware of this until then. have you done a general search on google, i've found some general info (below), but nothing actually from the tradesman.

http://www.contractoruk.com/money/national_insurance_contractors_guide.html

http://www.sjdaccountancy.com/about/resources/limited_company_and_umbrella_take_home_pay.html

harrys_dad

Yet another example of the race to the bottom in employment practices that has been taking place for years and accelerated considerably under the current Government. Zero hours contracts, agency working, umbrella companies, trash the unions, make it harder and more expensive to claim unfair dismissal, opt out of minimum wage for Icelandic employers, the list goes on and on.

All this is done in the supposed name of "more flexible working practices help the economy grow". What tosh. It is all about helping their friends in the construction and outsourcing industries make more profits (and of course donations to party funds) whilst the ordinary worker gets shafted.

Oh, and if you as a worker have problems after this with low pay "it is all the fault of them bloody immigrants, ain't it". Blame anybody but the real villains.

GB350

I've done a substantial amount of google searching on this subject and have in fact read both the articles abbiecadabra linked me. But thanks anyway.
My meeting with the agency rep today was informative and they admitted to taking a slight cut in their margins. I pointed out the fact that HMRC's intention regarding the new legislation was not to impose a pay cut on the workers but to either remove the agencies and payroll companies from the equation altogether, or at least to get them to renegotiate the rates they are charging to the main contractors. This would mean they could pay an adequate rate and leave enough room for their own margin of profit. Heaven forbid the main contractors might realise they could actually employ people directly for a lesser cost.
I've given them a figure I would settle for and until the end of the week to settle it or I'm off.
I can't think of any other profession which is expected to provide , constantly upgrade, maintain, and 3 monthly PAT test over £4,000 worth of power tools and accessories at their own expense just in order to do their day to day job.
In my next life I'm coming back as a painter.....